Upstream Tire Supply Chain Suffers Collective Losses; Industry Hits Cyclical Low
In July 2026, the focus of news in the rubber industry was the collective losses across the upstream tire supply chain. Companies producing the four core raw materials-natural rubber, carbon black, and steel cord-saw widespread declines in first-half performance, finding themselves in a predicament where revenue growth failed to translate into profit growth. Squeezed by a trio of factors-supply chain disruptions caused by geopolitical conflicts, skyrocketing raw material costs, and weak downstream demand-industry profit margins have been severely compressed, leaving the sector at the most painful point of its business cycle.
**Massive Losses for Natural Rubber Leader:** Hainan Rubber, the industry leader, is projected to report a massive net loss (excluding non-recurring items) of RMB 255 million to RMB 380 million for the first half of 2026. Its core profitability has continued to deteriorate, heavily impacted by production cuts due to high temperatures and drought, as well as shrinking price premiums associated with the EU Deforestation Regulation.
**Reversal of Fortunes in Carbon Black:** Jinneng Technology swung from profit to a projected loss of nearly RMB 600 million, while Heimao Carbon Black remained in the red. These results were primarily driven by Middle East geopolitical conflicts driving up raw material prices; downstream markets could not absorb these costs, causing the price spread to narrow continuously.
**Erosion of Export Advantages:** Daye Shares (a leader in steel cord) saw a surge in export volumes, but soaring costs-driven by exchange rate fluctuations and rising shipping fees-turned its export business from profitable to loss-making, resulting in an overall swing from profit to loss.